… 13th Plan to be aligned with the term of the new government
The finance ministry had estimated a budget outlay of Nu 72 billion (B) for the next fiscal year 2023-24, according to the ministry’s budget call notification.
This is 3.75 percent or Nu 2.8B lower than the budget estimate for this fiscal year 2022-23.
With the country’s estimated resource of Nu 53.06B in the next fiscal year, the ministry estimated Nu 41.15B as recurrent, exceeding the capital budget of Nu 30.85B.
As mandated by the Constitution, the recurrent budget has to be met by the domestic revenue and the domestic revenue was estimated at Nu 43.24B and Nu 9.82B as grants.
The recurrent budget will be allocated in the form of annual or block grants that includes mandatory expenses like pay and allowances, provident fund contribution, stipend, retirement benefits, and interest payments.
Compared to this fiscal year 2022-23, the recurrent budget saw an increase of Nu 4.81B and the capital budget was lowered by Nu 7.62B.
However, the government earlier stated that the capital should exceed the recurrent budget for the country’s economy to progress.
The next fiscal year 2023-24 will cover the last four months of the 12th five-year plan (FYP) period ending in October 2023 and eight months of the 13th Plan period, which is still under formulation.
The 13th Plan will start in February 2024 and end in February 2029 and will be aligned to the term of the next government, unlike in the past.
Since the 13th Plan is still under formulation, the ministry stated that the fiscal year will focus on facilitating the completion of spillover activities including ongoing externally financed projects and continuation of programmes or activities for ensuring uninterrupted delivery of public services.
The ministry asked the budgetary agencies to lead and engage closely in the budget preparation process to ensure that all ongoing, spill over and critical programmes or activities are sufficiently funded for the fiscal year.
“It would also help minimise ad hoc requests and reduce administrative burden,” it added.
The ministry estimates the country’s economy to grow at an average of 5 percent in the medium term driven by the recovery in services, manufacturing, and hydropower although the pandemic and geo-political tension weigh on. The medium term covers a period of up to three to five years.
“Hydropower generation capacity is expected to double, supporting growth, the current account balance, and the fiscal position,” it stated.
The ministry has projected a fiscal deficit for the fiscal year at Nu 18.94B, accounting to 8.56 percent of the gross domestic product based on the projected resources and expenditure.
“The deficit financing will be explored through concessional external or domestic borrowings,” it stated, adding that the deficit is expected to moderate as pandemic-related measures are gradually phased out and revenue reforms deepen.
Also, the ministry expects that current account deficit and reserve coverage to improve from declining hydropower-related imports and rising hydropower exports.
However, the economy is at risk because of the forecasted recession in global economic growth, increasing food and energy prices, and the modest upturn in tourism.
The ministry stated that the proposed activities must be tied to the results of the key performance indicators to ensure the quality of expenditure and proper management of limited public resources.
The proposal for any transformative initiatives – water, ICT, energy, food, and infrastructure has to be backed by a comprehensive pre-feasibility study, it added.